The Program Of Yealy Income Sistem Designed For Executives In State-Owned Businesses Of Our Country

With the growth and improvement of our socialist market economic system and deepening reform of state-owned enterprises the quality and working efficiency of the executives have great impact on the success of business operation. Therefore, it is paramount important to establish incentive and constraint mechanism and set up equitable income distribution mechanism within the businesses.Yearly income system (YIS) embodies income distribution for the executives, and is also a remuneration incentive system generally adopted in the western developed countries. The system was first piloted in Shanghai in 1992 and has since spread to more than ten thousand stated-owned businesses. However, as a result of trial method confusion in different parts of the country, the YIS has brought about many problems, such as unclear payment recipients, unreasonable compensation structure and scales, unscientific assessment norm etc., which objectively exercises its restraints upon the incentive and constraint function of YIS. Therefore, in the long run, it is necessary to make thorough study and exploration of the above-mentioned problems in order to perfect the pilot system.The article, taking state-owned business reform as the setting, based on the analysis of entrustment and human capital theory, and by comparison and analysis of typical program of executive's YIS, summarizes the existing problems arising and elaborates on the necessity and urgency of improving the executives' YIS in the state-owned businesses. Meanwhile, using the experience of the western countries in the implementation of yearly income system for reference and qualitative and quantitative analysis ( mathematics models) the paper advances the design and idea of perfecting YIS and takes into consideration the complete set of measures in carrying out executives' YIS in the state-owned businesses.The paper holds that presidents and general managers are the YIS payees in the businesses and directors ( managers) in ordinary state-own businesses. The choice of evaluating norms shows not only the principal indicators of operationachievements but also the management level and helping indicators of assets operation gains. The executives' yearly income is made up of annual basic income and annual effectiveness income according to the nature and line of different businesses. Annual basic income depends upon business scale and trade and business income level, and annual effectiveness income depends upon operation gains and is paid according to annual evaluation in a floating way. In the light of symmetry principle of risk and income, executives should pay twice as much as their yearly income as risk mortgage. In the long-term interests of businesses the risk income of the very year should not be paid fully, instead 30-50% of it should be turned into risk fund and the payment deferred.Finally, the article, choosing a local state-owned business as a case, makes a analysis and calculation of executive's yearly income in a Grade-Two business, illustrating the scientificalness and feasibility of the design program of executive's YIS, thus combining the theory study with current economy.